Bass, the leading brewer in the UK and the largest hotelier in the world, made pounds 501m before tax in the year to 30 September. That was shy of many forecasts, which extended beyond pounds 535m.
Brewing was affected by the company's sale of pubs to comply with the Beer Orders, and Holiday Inn hotels still had to contend with depressed occupancy levels.
The shares retreated 15p to 585p, having outperformed the market with a 70p rise over the last fortnight. A 6 per cent dividend increase to 18.9p did not help sentiment.
Despite profits being 16.5 per cent higher than the previous year's restated pounds 430m, investors took heed of the company's cautionary statement on prospects. 'We are experiencing very tough conditions,' said Ian Prosser, chairman and chief executive.
He added: 'There are signs that the American economy may be moving in the right direction at last, but I must temper that by saying we have seen false signals in the past two years.'
Despite that warning, analysts expect profits of around pounds 580m for 1992/3. Victor MacColl, an analyst at Henderson Crosthwaite, said the coming year's results were likely to contain little or no property profits because of yesterday's write-down in values.
It was almost evenly split between the company's 4,700 pubs and 1,680 Holiday Inn hotels. Some pounds 16m was charged against profits, and pounds 480m was taken direct to the revaluation reserve because Bass said it was on a temporary basis. But the group could not say what it meant by temporary. John Booth, financial controller, said it was easier 'to get a definition from the dictionary than from accounting rules'.
In addition, a comparison of analysts' projections with the latest figures does not point to an increase of 16 per cent for 1992/3 but one nearer 23 per cent.
That is because of the introduction of FRS3, the accounting standard that will virtually outlaw extraordinary items. These totalled pounds 91m at Bass in 1991/2.
Yesterday's reported profit of pounds 501m will be revised to pounds 473m, and the already restated pounds 430m in 1990/1 will be cut to pounds 403m.
Property disposal profits will have to be incorporated above the tax line. Under FRS3, Bass's earnings per share of 39.6p for 1991/2 would be reduced to 35.3p.
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